WASHINGTON 
Jolted by cost estimates as high as $1.6 trillion, Senate Democrats agreed to scale back planned subsidies for the uninsured and sought concessions totaling hundreds of billions of dollars from private industry Tuesday to defray the cost of sweeping health care legislation. At the same time, key Democrats disagreed openly among themselves over a proposed tax on health insurance benefits to pay for expanding coverage to the uninsured.

And a compromise with Republicans over a role for government in the insurance marketplace remained elusive.

Despite numerous uncertainties, Sen. Christopher Dodd, D-Conn., announced that the Senate Health, Education, Labor and Pensions Committee would begin formal work Wednesday on legislation he said would provide "successful, affordable, quality health care."

The meeting would mark the first public drafting session in either chamber on legislation to control the costs of health care while expanding coverage to the nearly 50 million who lack it – a goal that President Barack Obama has placed atop his domestic agenda.

Separately, the Senate Finance Committee is expected to begin work next week on a companion measure. Several officials said the Congressional Budget Office had issued a cost estimate of $1.6 trillion, with only about $560 billion paid for. They spoke on condition of anonymity, saying the matter was confidential.

Sen. Max Baucus, D-Mont., chairman of the panel, dismissed the estimates as outdated, and said the final bill would come in at about $1 trillion.

Sen. Kent Conrad, D-N.D., said that with cost estimates so high, "It is clear there have got to be changes made to make the whole package affordable."

At the Senate Health panel, officials said that after penciling in subsidies for families with incomes as high as $110,000, or 500 percent of the federal poverty level, they would limit the help to families up to $88,000 in income, or 400 percent of the poverty level. A preliminary CBO estimate on that measure, released Monday, calculated a cost of $1 trillion.

The emerging Finance Committee bill also cuts off subsidies at 400 percent of the poverty level, but officials said that might be lowered due to cost concerns. Baucus told reporters a reduction was "a live option," and there were indications the final cutoff would be closer to 300 percent of poverty – $66,000 for a four-person family– than 400 percent.

Additionally, Conrad said leading Democrats were searching for a way to prevent millions of people who currently are insured from taking the federal subsidies and then buying insurance on their own, opting out of their employer-provided plan.

In a brief interview with The Associated Press, Baucus also disclosed he was "very close" to agreement with a handful of industry groups for them to accept hundreds of billions of dollars less in Medicare and Medicaid fees than they currently are projected to receive. He said the talks have involved insurance companies, hospitals, doctors, pharmaceutical firms and the makers of medical devices, among others, but did not provide a specific figure for the savings overall.

The efforts are separate from pledges that Obama won earlier in the year from industry groups to restrain future increases in health care spending by roughly $2 trillion over a decade. In a letter to Republicans, the CBO said "most of the proposals are steps that do not require the involvement of the federal government or are not specified at a level of detail that would enable CBO to estimate budgetary savings."